Taipei, June 12 (CNA) The Executive Yuan approved Thursday a draft law amendment that would give corporate tax deductions to small- and medium-sized businesses that raise pay for their lower-level employees, according to Chang Chia-juch, Minister of Economic Affairs. The amendment to the Act for Development of Small and Medium Enterprises, which offers the companies a tax credit, is expected to lead more than 430,000 small- and medium-sized companies, or about one-third of all businesses nationwide, to increase pay for their employees, Chang said. Under the proposal, if the overall economic monitoring indicator reaches a certain level, small- and medium-sized firms that increase payroll expenses, not because of an adjustment in the statutory minimum wage, will be granted corporate tax deductions for the additional pay. The proposal states the rules only apply to small- and medium-sized companies' domestic lower-level employees, excluding employees at the levels of supervisors and managers or higher. To encourage small- and medium-sized enterprises to give their employees pay raises, the Ministry of Economic Affairs (MOEA) will also take into account enterprises raising pay when evaluating applications for government subsidies for business operations. It also plans to amend the Company Act, to require companies that earn money to allocate bonuses to employees, in addition to shareholders, Chang said. The tax deduction proposal has won the Ministry of Finance's approval, Chang added. According to MOEA statistics, there are 1.3 million small- and medium-sized companies in Taiwan, accounting for 97.67 percent of all businesses in the nation. Those companies employ 8.5 million people, or 78 percent of all workers in the country, meaning small- and medium-sized companies contribute greatly to the development of Taiwan's economy. (By Huang Chiao-wen and Evelyn Kao)